Pg 1 of 10 UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK SECURITIES INVESTOR PROTECTION CORPORATION, v. Plaintiff-Applicant, Adv. Pro. No. 08-01789 (BRL) BERNARD L. MADOFF INVESTMENT SECURITIES LLC, Defendant. SIPA LIQUIDATION (Substantively Consolidated) In re: BERNARD L. MADOFF, Debtor. IRVING H. PICARD, Trustee for the Liquidation of Bernard L. Madoff Investment Securities LLC, v. MAGNIFY INC., et al., Plaintiff, Adv. Pro. No. 10-05279 (BRL) Defendants. CASE MANAGEMENT PLAN Plaintiff Irving H. Picard (the Trustee ) as trustee for the liquidation of the business of Bernard L. Madoff Investment Securities LLC ( BLMIS ) under the Securities Investor Protection Act, 15 U.S.C. 78aaa, et seq. ( SIPA ), and the substantively consolidated estate of Bernard L. Madoff individually ( Madoff ), and Defendants Magnify, Inc. ( Magnify ), Strand International Investments Ltd. ( Strand ), Premero Investments Ltd. ( Premero ), Yair Green ( Green ), Kurt Brunner ( Brunner ), the Yeshaya Horowitz Association ( Yeshaya ), Osnat Dodelson ( Dodelson ), Express Enterprises Inc. ( Express ), Special Situations Cayman Fund LP ( Situations ), R.H. Book LLC and Robert H. Book (collectively the Book Defendants )
Pg 2 of 10 (the Trustee, together with the Defendants, are collectively referred to herein as the Parties ) hereby submit the following Proposed Case Management Plan, pursuant to Federal Rules of Civil Procedure 16 and 26, as incorporated into Bankruptcy Rules 7016 and 7026. 1. Status of Pleadings. a. Defendants Magnify, Strand, Premero, Green, Yeshaya and Situations have answered the Amended Complaint; b. Defendants Brunner and Dodelson have filed a Motion to Dismiss the Amended Complaint based on lack of personal jurisdiction; a hearing on the Motion to Dismiss is scheduled before this Court on May 10, 2012; c. The Book Defendants have not answered the Amended Complaint; their response date has been extended via stipulation to April 16, 2012. 2. Discovery Plan. a. Initial Disclosures: The Parties do not propose any changes in the form, or requirements for disclosures under Rule 26(a). The Parties agree that they shall serve Initial Disclosures required under Rule 26 on or before April 24, 2012. Following service of Trustee s Initial Disclosures, certain documents will be produced. The Trustee s production will vary between the Defendants based on their relationship to BLMIS. For those of the Defendants who held BLMIS accounts (including Magnify, Strand, Premero, and Yeshaya; collectively, the Accountholder Defendants ), as well as those of the Defendants alleged to be principals of the Accountholder Defendants (Green and Brunner, who deny these allegations), the Trustee will produce the account documents related to the Accountholder Defendants investments with BLMIS including account opening documents, correspondence with the customer, correspondence with Albert Igoin, account statements, and documents related to deposits into -2-
Pg 3 of 10 and withdrawals from the Accountholder Defendants BLMIS accounts. For the remaining Defendants (including Dodelson, Express, Situations, and the Book Defendants; collectively, the Recipient Defendants ), the Trustee will produce any correspondence directly related to withdrawals from BLMIS allegedly received by the Recipient Defendants, account statements for the BLMIS account(s) from which the funds were withdrawn, and other relevant documents related to deposits and withdrawals from which the funds were withdrawn. These account documents will be provided at a mutually agreeable time. The Trustee will also make available additional documents, as set forth in the Initial Disclosures, in the Data Room by April 24, 2012. b. Subjects on Which Discovery May be Needed: The Parties contemplate that discovery will be needed on all issues relating to the commencement of the BLMIS Ponzi scheme and relating to the avoidance and recovery of the transfers described in the Amended Complaint, and that fact and expert discovery will be needed. c. Document Demands: Requests for documents may be served as permitted by the Rules and/or any applicable foreign or international law. The deadline for serving document requests is November 1, 2012. This deadline does not apply to documents to be provided in the Trustee s Data Room. d. Interrogatories: Interrogatories pursuant to Local Rule 7033-1(b), if any, may be served on or after May 1, 2012, but no later than November 15, 2012. Contention based interrogatories pursuant to Local Rule 7033-1(c), if any, may be served on or after May 1, 2012, but no later than November 15, 2012. e. Requests for Admission: Requests for Admission, if any, must be served by January 2, 2013. -3-
Pg 4 of 10 f. Depositions: All non-expert depositions must be completed by the Fact Discovery Cut-Off date in paragraph 2(g) below. Depositions shall proceed concurrently, with no party having priority. As to depositions taken in the United States, the Parties will endeavor to conclude the majority of depositions within the seven (7) hours provided under Rule 30(d)(1), although the Parties acknowledge that there may be certain depositions that cannot be concluded within the time limit. The Parties will attempt in good faith to agree to reasonable extensions (or reductions) of the seven (7) hour limit as appropriate, and failing agreement any party may make application to the Court for an extension (or reduction) of that time limit. g. Fact Discovery Cut-Off: All fact discovery is to be completed on or before March 1, 2013. h. Foreign Discovery: The Parties anticipate that a significant amount of discovery will be directed at individuals and entities located outside of the United States. The Parties contemplate that all requests directed at Parties will proceed in the normal course under the Rules, as supplemented by any applicable Local Rule. As to requests directed at non-parties located abroad, the Parties understand that resort to applicable foreign and international law, including the Hague Evidence Convention, may be necessary. The Parties reserve their right to move the Court as appropriate for an extension of any of the deadlines in this Case Management Plan to accommodate circumstances that could arise in the course of international discovery. i. Experts: Every party asserting a claim or defense on which the party has the burden of proof (including any counterclaim, cross-claim or third-party claim) that intends to offer expert testimony with respect to such claim must make the disclosures required by Federal Rule of Civil Procedure 26(a)(2)(D)(i) on or before March 15, 2013. Each expert must be made available for deposition at an agreed upon time and place, but not later than May 15, 2013. -4-
Pg 5 of 10 Every party that intends to offer expert testimony in opposition to such claim or defense must make the disclosure required by Federal Rule of Civil Procedure 26(a)(2)(D)(ii) on or before March 15, 2013. Each such expert must be made available for deposition at an agreed upon time and place, but not later than May 15, 2013. No expert testimony (whether designated as rebuttal or otherwise) will be permitted by other experts or beyond the scope of the opinions covered by the aforesaid disclosures except upon prior express permission of the Court, application for which must be made no later than ten (10) days after the date specified in the immediately preceding sentences. The foregoing restriction shall not include amendments to expert reports in light of new evidence as required by Federal Rule of Civil Procedure 26. j. Limitations on Discovery Imposed under the Federal and/or Local Rules: Limitations on written discovery will be governed consistent with the Federal Rules of Civil Procedure and this Court s Local Rules, subject to amendment by agreement of the Parties or application to the Court for good cause. The Parties agree that they will work in good faith to identify the requisite number of deponents and depositions necessary following service of the Parties Initial Disclosures. All deadlines set forth herein shall be subject to amendment by agreement of the parties or upon application to the Court for good cause shown. k. Pending Motion to Dismiss: The Parties understand that, unless agreed otherwise, no discovery requests will be served upon Defendants Brunner and Dodelson, except to the extent the Court permits jurisdictional discovery over the objections of Brunner and Dodelson, until the Court resolves those Defendants pending motions to dismiss. The Parties may produce discovery, including initial disclosures, on a CD- ROM, in an electronic data room, or other similar electronic format. Given the volume of documentation that may be subject to disclosure in this matter, the Parties may produce a -5-
Pg 6 of 10 summary report, such as an expert report, and provide access to the underlying documentation on which the summary report relies in an electronic data room or other medium for review by the defendants. With regard to documents produced or made available electronically: (1) Information and documents disclosed shall be text searchable; (2) Upon request, the Trustee or Defendant, as the case may be, shall provide data and image load files necessary to review documents on search platforms (i.e., Summation, Concordance, Relativity); (3) The Parties shall produce any system-created or nonprivileged captured objective metadata, such as date fields, author fields, custodian fields, path to native file, etc.; (4) To the extent that documents are organized by date, custodian, or subject matter, either because they were so maintained or because the Trustee or Defendant so organized them, the Trustee or Defendant shall produce such documents as organized; and (5) Nothing herein shall preclude the Parties from requesting additional formats of production, metadata, or native documents. In the event of a discovery dispute between the Parties, the Parties shall meet and confer in an attempt to resolve the dispute. If not resolved, the Parties shall comply with Local Bankruptcy Rule 7007-1 with respect to resolution of the dispute. Unless the Parties agree to a broader scope, absent further order of the Court upon a showing of good cause, discovery will be limited solely and specifically to nonprivileged matters to the extent discoverable under Federal Rule 26(b)(1) which relate to: (a) -6-
Pg 7 of 10 the commencement of the BLMIS Ponzi scheme; (b) the calculation of net equity for the Accountholder Defendants BLMIS accounts; (c) the financial condition of BLMIS; (d) the activities of BLMIS, including both fraudulent conduct, including the Ponzi scheme, and legitimate operations; (e) the Accountholder Defendants account documents and customer correspondence and interactions with BLMIS, its employees, agents and other investors or customers; (f) interactions between Albert Igoin and BLMIS, its employees, agents, investors and other customers; (g) the internal records of BLMIS; (h) transfers of money by, among, and within BLMIS; (i) the Defendants good faith or lack thereof, including issues related to the defendants operations and actual or constructive notice of fraudulent activity by BLMIS or anyone acting on its behalf; (j) disclosures made by BLMIS under federal and/or state laws, such as disclosures to the SEC; (k) the identity of other persons or entities that may be liable for the transfers at issue, whether as subsequent transferees or for some other reason; and (l) potential defenses and cross-claims. The Parties may take depositions of fact witnesses during the period for fact discovery after Parties Initial Disclosures have been made. The Trustee shall make his financial professionals submitting expert evidence on behalf of the Trustee available for depositions and may coordinate such depositions in multiple Avoidance Actions to maximize efficiency and use of resources. The Trustee shall notify all interested parties of the proposed date, time and location of any such depositions to be coordinated in multiple Avoidance Actions. To the extent a deposition is so coordinated, the limitations set forth in Federal Rule 30(d)(1) shall not apply, and the parties shall agree on an appropriate duration for the deposition. Depositions of the Trustee are prohibited absent an order issued by this Court upon a showing of good cause. -7-
Pg 8 of 10 To the extent that the Trustee proffers an expert witness on an issue that is common to more than one Avoidance Action, the Trustee may coordinate such deposition in multiple Avoidance Actions to maximize efficiency and use of resources. The Trustee shall notify all interested parties of the proposed date, time and location of any such depositions to be coordinated in multiple Avoidance Actions. To the extent a deposition is so coordinated, the limitations set forth in Federal Rule 30(d)(1) shall not apply, and the parties shall agree on an appropriate duration for the deposition. Depositions of the Trustee are prohibited absent an order issued by this Court upon a showing of good cause. All depositions of the Trustee s fact and expert witnesses shall occur at the offices of Baker & Hostetler LLP, 45 Rockefeller Plaza, New York, NY 10111, or such other location as the Parties may agree. Depositions of Defendants expert and fact witnesses shall occur at such place as the Parties shall mutually agree. 3. Proposed Modifications of Standard Pretrial Proceeding due to the Special Nature of the Action. The Parties do not presently believe that any modifications are appropriate or necessary, and will contact the Court if their belief in this regard changes. 4. Prospects for Settlement, including whether a Settlement Conference should be Scheduled and whether the Parties will Stipulate to the Trial Judge acting as Settlement Judge. The Trustee has engaged in settlement discussions with certain Parties. The Parties believe that it would be premature to schedule a settlement conference at this time. 5. Any other Matter that may add to the Just and Expeditious Disposition of this Matter. The Parties are not presently aware of any other matter that may add to the just and expeditious disposition of this matter. -8-
Pg 9 of 10 6. Trial. The Parties propose that they will confer with each other and the Court at the conclusion of all discovery to schedule a final pre-trial and trial date. 10:00 am. 7. Next Conference. The Parties shall appear before the court on April 25, 2012, at 8. Parties and Counsel. The following Parties join in this proposed Case Management Plan, through their counsel. Dated: New York, New York March 27, 2012 /s/ Timothy S. Pfeifer Baker & Hostetler LLP 45 Rockefeller Plaza New York, NY 10111 Telephone: (212) 589-4200 Facsimile: (212) 589-4201 David J. Sheehan e-mail: dsheehan@bakerlaw.com Tracy L. Cole e-mail: tcole@bakerlaw.com Timothy S. Pfeifer e-mail: tpfeifer@bakerlaw.com M. Elizabeth Howe e-mail: bhowe@bakerlaw.com David M. McMillan e-mail: dmcmillan@bakerlaw.com /s/ Michael Wexelbaum Davidoff Malito & Hutcher LLP 605 Third Avenue, 34th Floor New York, NY 10158 Telephone: (212) 557-7200 Facsimile: (212) 286-1884 Michael Wexelbaum e-mail: mw@dmlegal.com Larry Hutcher e-mail: lkh@dmlegal.com Attorneys for Defendants Yair Green, Kurt Brunner, Osnat Dodelson, Magnify Inc., the Yeshaya Horowitz Association, Strand International Investments Ltd., Premero Investments Ltd., and Express Enterprises Inc. Attorneys for Irving H. Picard, Trustee for the Substantively Consolidated SIPA Liquidation of Bernard L. Madoff Investment Securities LLC and Bernard L. Madoff -9-
Pg 10 of 10 /s/ David McGill Kobre & Kim LLP 800 Third Avenue New York, NY 10022 Telephone: (212) 488-1200 Facsimile: (212) 488-1220 Steven Kobre e-mail: steven.kobre@kobrekim.com Danielle Rose e-mail: danielle.rose@kobrekim.com David McGill e-mail: david.mcgill@kobrekim.com Attorneys for Robert H. Book and R.H. Book LLC /s/ Sheila A. Sadighi Lowenstein Sandler P.C. 1251 Avenue of the Americas, 18th Floor New York, NY 10020 Telephone: (212) 262-6700 Facsimile: (212) 262-7402 Sheila A. Sadighi e-mail: ssadighi@lowenstein.com Timothy R. Wheeler e-mail: twheeler@lowenstein.com Attorneys for Defendant Special Situations Cayman Fund LP So Ordered this 28 th day of March, 2012. /s/burton R. Lifland HONORABLE BURTON R. LIFLAND UNITED STATES BANKRUPTCY JUDGE -10-